SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): December 18, 1997
K N ENERGY, INC.
(Exact name of registrant as specified in its charter)
Kansas 1-6446 48-0290000
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or organization) Identification No.)
370 Van Gordon Street
P. O. Box 281304
Lakewood, CO 80228-8304
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (303) 989-1740
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Item 5. Other Events.
On December 18, 1997, KN Energy, Inc., a Kansas corporation (the
"Company"), and Occidental Petroleum Corporation, a Delaware
corporation ("Occidental"), entered into a Stock Purchase Agreement
(the "Agreement"), upon and subject to the terms and conditions of
which the Company will acquire all of the issued and outstanding shares
of common stock, par value $.01 per share, of MidCon Corp., a Delaware
corporation and a wholly owned subsidiary of Occidental, for $3.49
billion in cash. A copy of the Company's press release dated December
18, 1997 is attached hereto as Exhibit 99 and is incorporated herein by
reference.
Item 7. Financial Statements, Pro-Forma Financial Information and Exhibits.
(a) Financial Statements - None
(b) Pro-Forma Financial Statements - None
(c) Exhibits
(99)--Press Release of KN Energy, Inc. dated
December 18, 1997.
EXHIBIT INDEX
Exhibit Number Exhibit Description
(99) Press Release of K N Energy, Inc.
dated December 18, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
K N ENERGY, INC.
Date: January 5, 1998 By: /s/ Martha B. Wyrsch
Martha B. Wyrsch
Vice President, General Counsel
and Secretary
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FOR IMMEDIATE RELEASE CONTACT: Mark Stutz Steven P. Eschbach
Media Relations Investor Relations
(303) 914-4649 (303) 763-3618
[email protected] [email protected]
KN ENERGY ACQUIRES MIDCON CORP. FOR $3.49 BILLION
LAKEWOOD, COLO., December 18, 1997 B KN Energy, Inc. (NYSE-KNE), announced
today that it has agreed to acquire MidCon Corp., based in Lombard, Ill., for
$3.49 billion, an acquisition that represents a significant extension of the
company's stated strategy. The purchase price is 8.25 times trailing EBITDA
for the 12-month period ended September 30, 1997.
The transaction, which has been approved by the boards of KN Energy and
Occidental Petroleum, is expected to be accretive to KN Energy=s earnings per
share and cash flow beginning in 1998 after giving effect to a planned debt and
equity financing. KN Energy will finance this transaction using a bank
acquisition facility that is expected to be refinanced through the issuance of
debt and equity securities in the capital markets. KN Energy expects to close
on the transaction by early 1998. Closing will be subject to Hart-Scott-Rodino
approval.
Larry Hall, KN Energy chairman and chief executive officer, said the
MidCon acquisition fits well with KN's value stream strategy of identifying
and "wrapping" non-regulated assets around the regulated portion of its
business.
"This is a strategic extension of our geographic assets and is consistent
with other acquisitions we have made," said Hall. "It enables KN Energy to
apply its value stream strategy to a new set of assets. This is a strategy we
have implemented successfully on our own system, and we believe it will
continue to enable us to increase shareholder value and provide more
opportunities for our customers."
KN Energy has a track record of successfully integrating acquisitions into
its system. Since 1989, the company has completed numerous acquisitions, joint
ventures and partnerships totaling more than $1.5 billion. During that same
period, KN Energy has increased its total assets by 236 percent, net income by
394 percent and the aggregate market value of the company by 506 percent.
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KN ENERGY ACQUIRES MIDCON
With the combined operations of the two companies, KN Energy becomes a
$7.8 billion asset company, with estimated operating revenue of $4.7 billion,
based on the 12-month period ended Sept. 30, 1997. It will transport or sell
approximately 17 percent of the natural gas in the United States.
After closing, KN Energy will have more than 26,000 miles of interstate,
intrastate and offshore pipeline in 15 states, with current and potential
access to 15 major markets. The company will access natural gas supplies in
four of the five major natural gas supply basins in the United States,
including Mid-Continent, West Texas, and the highly prolific Rocky Mountain and
Gulf Coast regions, and will market in excess of 4 billion cubic feet per day.
The combined company will have more than 12,000 miles of gathering and
processing pipeline; 8,400 miles of distribution pipeline; and 233 billion
cubic feet of natural gas storage. The combination of KN Services, Inc., and
MidCon Gas Services Corp. will provide for a broad array of commodity services,
contracts and specialized applications for mid-market, term market and
regional customers.
"MidCon's strength is the size and geographic scope of its interstate
pipeline system, and its access to major markets. KN Energy=s strength is its
aggressive and creative management, its proven ability to profitably grow its
assets, and its access to natural gas supplies," Hall said. "KN's management
team has set a course to execute the same successful strategy across MidCon's
assets that we have across our own."
The acquisition also will bring together two pioneering companies leading
the charge for deregulation of national energy markets -- KN Energy's en able
joint venture with PacifiCorp and MidCon's mc2 Inc. Combined, the two entities
will have a specific focus on residential and small-business, mass-market
plays.
MidCon, a wholly owned subsidiary of the Occidental Petroleum Corp.,
primarily is engaged in the regulated purchase, gathering, processing,
transmission, storage and sale of natural gas to utilities, municipalities,
and large commercial and industrial companies from the Gulf of Mexico to the
Canadian border. Its subsidiary, Natural Gas Pipeline of America (NGPL), is one
of the largest natural gas transporters into the Chicago market. MidCon and
NGPL are uniquely positioned in the Chicago market with approximately 2.4
billion cubic feet per day delivery storage.
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KN ENERGY ACQUIRES MIDCON
MidCon's principal subsidiaries include NGPL, MidCon Texas Pipeline
Operator, Inc., MidCon Gas Services, MidCon Power Services Corp., mc2, which
markets natural gas and electricity at retail levels, and MidCon Gas Products
Corp.
KN Energy, Inc., based in Lakewood is an integrated energy services company
with operations that include natural gas gathering, processing, marketing,
storage, transportation, energy commodity sales B natural gas and natural gas
liquids B and innovative services designed for consumers, utilities and
commercial entities.
KN Energy was advised on the acquisition by Morgan Stanley & Co.
Incorporated and Petrie Parkman & Co., Inc. Salomon Smith Barney will also
provide a fairness opinion to KN Energy.
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This news release contains forward-looking statements within the scope of
the Securities Act of 1933 and the Securities Exchange Act of 1934. Although
the company believes that these statements are based upon reasonable
assumptions, it can give no assurance that its goals will be achieved.
Differences between assumed facts and actual results can be material depending
on the circumstances and investors should be aware of important factors that
could have a material impact on future results. Such factors include, among
others, the pace of deregulation of retail natural gas and electricity;
federal, state and international regulatory developments; the timing and extent
of changes in commodity prices for oil, natural gas, natural gas liquids,
electricity, certain agricultural products and interest rates; the extent of
success in acquiring natural gas facilities; the timing and success of efforts
to develop power, pipeline and other projects; political developments in
foreign countries; weather-related factors; and conditions of the capital
markets and equity markets during the periods noted in the release. All of
these factors are difficult to predict and many are beyond the company's
control.
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